- SWFX traders are 55% bullish
- 63% of pending commands are to buy the metal
- The bullion opened at 1,234.60
- Upcoming Events: US Existing Home Sales; FOMC Member's Powell's Speech; FOMC Meeting Minutes
US building permits advanced more than expected whereas homebuilding activity weakened in January, official figures revealed on Thursday. The Commerce Department reported building permits rose 4.6% to a seasonally adjusted annual pace of 1.29 million in January, following the previous month's upwardly revised 1.23 million units and surpassing analysts' expectations for a 1.23 million unit rate. The increase caught markets by surprise, as the figure reached the highest level since November 2015, suggesting solid growth in starts in the middle of 2017.
Meanwhile, housing starts declined 2.6% to an annualized rate of 1.25 million units in the same month, following December's upwardly revised reading of 1.28 million, whereas economists expected them to increase to a 1.23. Analysts suggest that the housing market recovery is likely to be sustained by strong labor market, which supported household formation. Separately, the Philadelphia Federal Reserve said its Manufacturing Index jumped to 43.3 points in February, the highest level in 33 years, driven by a jump in new orders, which climbed to 38.0 from 26.00. Data also showed the Employment Index fell to 11.1 from 12.8, while the Business Outlook Index for the next six months slid to 53.5 points.
Upcoming events: FOMC
The second half of the day will begin with the US releasing minor data, as the US Existing Home Sales data will be published at 15:00 GMT. However, the most important events of the day will occur later in the day. At 18:00 GMT FOMC member Powell is set to give a speech prior to the top event of the day. At 19:00 GMT the FOMC Meeting Minutes will be released, and they are most likely to reveal the future direction of the US Dollar.
Gold's volatility increases
Daily chart: The yellow metal remained near the 1,235 level for the fifth consecutive trading session during the early hours of Wednesday's trading session. However, during Tuesday's trading the bullions price increased its volatility to the downside, as the commodity price once more confirmed the uptrend line at 1,226.12. The bullion seems to have formed a short term triangle, as there is another trend line, which together with the uptrend line forms a triangle pattern. Although, for the clues regarding the direction of the upcoming break out market participants need to look at fundamental data coming out from the Federal Reserve.Daily chart
Hourly chart: The hourly chart reveals that the trend lines are squeezing the bullion's price, while the 55, 100 and 200-hour SMAs are bouncing the commodity price around in the range of the triangle pattern. It can be seen that the breakout will not occur on Wednesday, as the yellow metal's price is most likely set to decline down to the weekly PP once more before that occurs.
Hourly chart
Trader opinion unchanged
OANDA Gold traders remain bullish on the yellow metal, as open positions were 62% bullish on Wednesday, compared to 63% previously. In addition, traders of SAXO bank have increased their bullish outlook, regarding the yellow metal, as 62.12% of open positions are bullish, compared to 60.32% yesterday.